a

GAO

United States Government Accountability Office

Report to the Ranking Democratic 

Member, Committee on Transportation 

and Infrastructure, House of 

Representatives

September 2005 WETLANDS 

PROTECTION

Corps of Engineers 

Does Not Have an 

Effective Oversight 

Approach to Ensure 

That Compensatory 

Mitigation Is 

Occurring

GAO-05-898
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

www.gao.gov/cgi-bin/getrpt?GAO-05-898.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Anu K. Mittal at 

(202) 512-3841 or mittala@gao.gov. 

Highlights of GAO-05-898, a report to the 

Ranking Democratic Member, Committee 

on Transportation and Infrastructure, 

House of Representatives 

September 2005

WETLANDS PROTECTION 

Corps of Engineers Does Not Have an 

Effective Oversight Approach to Ensure 

That Compensatory Mitigation Is 

Occurring 

The Corps has developed guidance that establishes two primary oversight 

activities for compensatory mitigation: requiring the parties performing 

mitigation to periodically submit monitoring reports to the Corps and 

conducting compliance inspections of the mitigation. However, parts of the 

guidance are vague or internally inconsistent. For example, the guidance 

suggests that the Corps place a high priority on requiring and reviewing 

monitoring reports when “substantial mitigation” is required, but it does not 

define substantial mitigation. Furthermore, one section of the guidance 

directs district officials to conduct compliance inspections of a relatively 

high percentage of compensatory mitigation sites, while another section 

designates these inspections as a low priority, leading to confusion by Corps 

officials. 

Overall, the seven Corps districts GAO visited performed limited oversight to 

determine the status of compensatory mitigation. The Corps required 

monitoring reports for 89 of the 152 permit files reviewed where the 

permittee was required to perform compensatory mitigation. However, only 

21 of these files contained evidence that the Corps received these reports. 

Moreover, only 15 percent of the 152 permit files contained evidence that the 

Corps had conducted a compliance inspection. The Corps districts provided 

somewhat more oversight for mitigation performed by the 85 mitigation 

banks and 12 in-lieu-fee arrangements that GAO reviewed. For the 60 

mitigation banks that were required to submit monitoring reports, 70 percent 

of the files contained evidence that the Corps had received at least one 

monitoring report. However, only 36 percent of the mitigation bank files 

that GAO reviewed contained evidence that the Corps conducted an 

inspection. For the 6 in-lieu-fee arrangements that were required to submit 

monitoring reports to the Corps, 5 had submitted at least one report. In 

addition, the Corps had conducted inspections of 5 of the 12 arrangements. 

The Corps can take a variety of enforcement actions if required 

compensatory mitigation is not performed. These actions include issuing 

compliance orders, assessing administrative penalties of up to $27,500, 

requiring the permittee to forfeit a bond, suspending or revoking a permit, 

implementing the enforcement provisions of agreements with third parties, 

and recommending legal actions. District officials rarely use these actions 

and rely primarily on negotiation to resolve any violations. In some cases, 

GAO found district officials may not be able to use enforcement actions after 

detecting instances of noncompliance because they have limited their 

enforcement capabilities. For example, because they did not always specify 

the requirements of compensatory mitigation in the permits, they had no 

legal recourse for noncompliance. 

Because wetlands provide valuable 

functions, the administration set a 

national goal of no net loss of 

wetlands in 1989. Section 404 of 

the Clean Water Act generally 

prohibits the discharge of dredged 

or fill material into waters of the 

United States, which include 

certain wetlands, without a permit 

from the U.S. Army Corps of 

Engineers (Corps). To help 

achieve the goal of no net loss, the 

Corps can require compensatory 

mitigation, such as restoring a 

former wetland, as a condition of a 

permit when the loss of wetlands is 

unavoidable. Permittees can 

perform the mitigation or pay a 

third party—a mitigation bank or 

an in-lieu-fee arrangement—to 

perform the mitigation. GAO was 

asked to review the (1) guidance 

the Corps has issued for overseeing 

compensatory mitigation, (2) 

extent to which the Corps oversees 

compensatory mitigation, and (3) 

enforcement actions the Corps can 

take if required mitigation is not 

performed and the extent to which 

it takes these actions. 

What GAO Recommends

GAO recommends that the 

Secretary of the Army direct the 

Corps to establish an effective 

oversight approach that will ensure 

that permittees and third parties 

are performing required 

compensatory mitigation. In 

commenting on our report, the 

Department of Defense generally 

agreed with GAO’s 

recommendations. 
Page i GAO-05-898 Wetlands Protection

Contents

Letter 1

Results in Brief 4

Background 7

Corps Guidance for Oversight of Compensatory Mitigation Is 

Sometimes Vague or Internally Inconsistent 12

Corps Districts Perform Limited Oversight of Compensatory 

Mitigation 17

Corps Districts Can Take a Variety of Enforcement Actions to 

Resolve Violations but Rely Primarily on Negotiation 21

Conclusions 26

Recommendations for Executive Action 27

Agency Comments and Our Evaluation 28

Appendixes

Appendix I: Scope and Methodology 29

Appendix II: Corps of Engineers Federal Guidance for Oversight of 

Compensatory Mitigation 33

Appendix III: File Review Results by Corps District 36

Appendix IV: Comments from the Department of Defense 39

Appendix V: GAO Contact and Staff Acknowledgments 42

Tables Table 1: Permit Files Reviewed at the Seven Districts, Fiscal Year 

2000 30

Table 2: Mitigation Banks Reviewed at the Seven Districts, 

November 28, 1995, through December 2004 31

Table 3: In-Lieu-Fee Arrangements Reviewed at the Seven 

Districts 32

Table 4: Results of Review of Corps Oversight of Individual Permits 

Issued in Fiscal Year 2000 Where Permittees Are 

Responsible for Compensatory Mitigation 36

Table 5: Results of Review of Corps Oversight of Mitigation Banks 

Approved from November 1995 through December 2003 37

Table 6: Results of Review of Corps Oversight of In-Lieu-Fee 

Arrangements Currently in Operation at the Time of Our 

Site Visit 37

Figures Figure 1: Marsh in Michigan 7

Figure 2: Bayou in Louisiana 8
Contents

Page ii GAO-05-898 Wetlands Protection

Figure 3: Wetlands Restoration Project in Washington, D.C. (Before 

and After) 11

Abbreviations

Corps U.S. Army Corps of Engineers

EPA Environmental Protection Agency

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Page 1 GAO-05-898 Wetlands Protection

United States Government Accountability Office

Washington, D.C. 20548

A

September 8, 2005 Letr

The Honorable James L. Oberstar

Ranking Democratic Member

Committee on Transportation and Infrastructure

House of Representatives

Dear Mr. Oberstar:

Wetlands such as bogs, swamps, and marshes support a number of valuable 

functions—controlling floods, improving water quality, and providing 

wildlife habitat, among other things. Given the value of these functions, the 

administration set a national goal in 1989 of balancing the losses and gains 

of wetlands to achieve no net loss of wetlands. Each subsequent President 

has reaffirmed and expanded this goal to achieve net gains of wetlands in 

the long term. The U.S. Army Corps of Engineers (Corps) is responsible for 

processing permit applications from individuals and businesses seeking to 

build driveways, houses, golf courses, or commercial buildings or perform 

other activities that could degrade or destroy wetlands on their property, 

and each year the Corps approves thousands of these permit applications. 

The Corps’ decisions are to reflect the national concern for both the 

protection and utilization of important resources. 

Under section 404 of the Clean Water Act, the Corps and the Environmental 

Protection Agency (EPA) regulate activities affecting wetlands. Under 

related regulations and guidance issued by these agencies, a permittee is 

expected to avoid deliberate discharge of fill materials into wetlands or 

other federally regulated waters and then to minimize discharges that 

cannot be avoided. If such discharges are unavoidable, the Corps can 

require mitigation to compensate for the loss and/or degradation of 

wetlands from permitted activities as a condition of issuing the permit. 

Such compensatory mitigation could involve (1) creating a new wetland, 

(2) restoring a former wetland, (3) enhancing a degraded wetland, or (4) 

preserving an existing wetland. Since 1993, the Corps has required such 

mitigation on more than 40,000 acres of land per year. Permittees may 

perform their own compensatory mitigation, often on or near the project 

site, or they may pay another entity to perform mitigation, usually at a 

location away from the project site, but generally within the same 

watershed. This kind of mitigation, known as third-party mitigation, is 

typically performed by mitigation banks or sponsors of in-lieu-fee 

arrangements. Mitigation banks are often private for-profit entities with 

land in areas where they believe that they can successfully establish 
Page 2 GAO-05-898 Wetlands Protection

wetlands.1 These areas include those that have the potential to become 

wetlands, previously filled wetlands, wetlands that have been degraded by 

invasive plant species,2

 or wetlands that are threatened by development. 

After the mitigation banks improve these areas as wetlands, permittees 

required to perform compensatory mitigation pay fees to the mitigation 

bank to fulfill their mitigation requirements. In contrast to mitigation 

banks, in-lieu-fee arrangements are often sponsored by public or nonprofit 

entities. Under agreements with the Corps, in-lieu-fee sponsors receive 

payments from multiple permittees required to perform compensatory 

mitigation. Then, at a later date, the sponsors use these funds to establish 

wetlands. 

The Corps is responsible for ensuring that permittees, mitigation banks, 

and in-lieu-fee sponsors perform required compensatory mitigation. 

However, the Corps historically has not emphasized oversight of such 

mitigation activities. In 1988, we reported that the Corps placed a high 

priority on issuing permits and did not routinely inspect project sites to 

ensure that permittees were in compliance with their permit conditions, 

which include any compensatory mitigation that the permittee was 

required to perform.3

 More recently, the National Research Council, 

environmental groups, and others have raised concerns that the Corps may 

not spend sufficient time on oversight to ensure that permittees or third 

parties are performing the required compensatory mitigation. 

In this context, you asked us to review the (1) guidance the Corps has 

established for overseeing compensatory mitigation, (2) extent to which 

the Corps oversees compensatory mitigation, and (3) enforcement actions 

the Corps can take if it determines that compensatory mitigation 

requirements are not being met and the extent to which it takes such 

actions.

1

According to the Environmental Law Institute, in the early 1990s, most banks were 

sponsored by public entities, such as state highway agencies, but now most mitigation 

banks are sponsored by private entities.

2

Invasive species are nonnative plants, animals, and microorganisms that are found 

throughout the United States and that have a devastating effect on natural areas, where they 

can take over wetland habitats and strangle native flora. 

3

GAO, Wetlands: The Corps of Engineers’ Administration of the Section 404 Program, 

GAO/RCED-88-110 (Washington, D.C.: July 28, 1988).
Page 3 GAO-05-898 Wetlands Protection

In conducting our work, we selected 7 of the 38 Corps districts that 

implement the section 404 program—Charleston, South Carolina; 

Galveston, Texas; Jacksonville, Florida; New Orleans, Louisiana; St. Paul, 

Minnesota; Seattle, Washington; and Wilmington, North Carolina. We 

selected these districts because they represent different geographic areas 

of the United States and collectively accounted for over two-thirds of the 

compensatory mitigation required by individual permits issued in fiscal 

year 2003.4

 To identify the guidance the Corps has established for 

overseeing compensatory mitigation, we examined Corps documents and 

interviewed officials from Corps headquarters, as well as from Corps’ 

district offices. 

To determine the extent to which the Corps oversees compensatory 

mitigation, we reviewed a total of 249 files. We reviewed 152 permit files 

issued in fiscal year 2000 where the permittee was responsible for the 

mitigation. We selected this time frame because most of the permits we 

reviewed were valid for 5 years or less, and sufficient time would have 

passed for the permittee to begin work on the permitted project and for the 

Corps to have received a monitoring report or conducted a compliance 

inspection. We also reviewed files for 85 mitigation banks and 12 in-lieu-fee 

arrangements.5

 The mitigation bank and in-lieu-fee arrangement files we 

reviewed usually provided data on the mitigation activities for multiple 

permittees, and the mitigation conducted can encompass thousands of 

acres. While our results cannot be generalized to all 38 Corps districts, 

according to a Corps official responsible for managing the program 

nationally, our findings would most likely represent program 

4

Individual permits are typically issued for projects that may have substantial environmental 

impacts. For smaller impacts, Corps officials generally issue either letters of permission, 

which are used when the proposed work is minor and is not expected to receive appreciable 

opposition, or general permits, which cover activities that have been identified as being 

substantially similar in nature, such as stabilizing stream banks. The Charleston, Galveston, 

Jacksonville, New Orleans, St. Paul, and Wilmington districts were the top six districts 

nationwide in terms of mitigation required by individual permits. Seattle was among the top 

districts in the western part of the United States. 

5

In those districts where it was not feasible to review all files, we selected a random sample 

of files from the district’s database for review. We reviewed a random sample of permit files 

in the Jacksonville district and a random sample of mitigation bank files in the Jacksonville, 

New Orleans, and St. Paul districts. Because the New Orleans district was not able to 

identify permits requiring the permittee to perform mitigation from their database, we asked 

district officials to select these permits, and we reviewed all of them.
Page 4 GAO-05-898 Wetlands Protection

implementation by other Corps districts. We also interviewed district 

officials to obtain additional information on how they oversee 

compensatory mitigation. 

To identify enforcement actions the Corps can take if it determines that 

compensatory mitigation requirements are not being met and the extent to 

which it takes these actions, we examined agency regulations and 

documents that outline available enforcement actions, reviewed agency 

data on noncompliance cases, and discussed levels of noncompliance and 

actions taken with district officials. In addition, we interviewed several 

sponsors of mitigation banks and a sponsor of an in-lieu-fee arrangement to 

obtain their perspectives on the Corps’ mitigation program. A more 

detailed description of the scope and methodology of our review is 

presented in appendix I. We performed our work between June 2004 and 

September 2005 in accordance with generally accepted government 

auditing standards. 

Results in Brief The Corps has developed guidance that establishes two primary oversight 

activities for compensatory mitigation. First, the Corps guidance directs 

district officials to require the parties performing mitigation to periodically 

submit monitoring reports to the Corps on the status of compensatory 

mitigation. Second, the guidance calls for district officials to conduct 

compliance inspections of the mitigation. However, we found that parts of 

the guidance are vague or internally inconsistent, thus limiting their 

usefulness. For example, the guidance suggests that requiring and 

reviewing monitoring reports is a high-priority activity for the Corps when 

“substantial mitigation” is required, but it does not define substantial 

mitigation. Furthermore, the guidance does not indicate what actions 

Corps officials should take if permittees or third parties do not submit 

required monitoring reports. The guidance is also internally inconsistent 

because, in one section of the guidance, district officials are directed to 

conduct compliance inspections on a relatively high percentage of 

compensatory mitigation sites to ensure that permit conditions have been 

met, while another section designates these inspections as a low-priority 

activity, to be conducted only if the goals for other higher priority work, 

such as issuing permits, have been achieved. As a result, district officials 

told us that they are unsure of how many resources to allocate to 

compliance inspections. The Corps is currently developing new guidance, 

which it expects to issue by fall of 2005. 
Page 5 GAO-05-898 Wetlands Protection

Overall, the Corps districts we visited have performed limited oversight to 

determine the status of required compensatory mitigation. For the 152 

permit files that we reviewed where the individual permittee was required 

to perform compensatory mitigation, we found little evidence that required 

monitoring reports were submitted or that the Corps conducted 

compliance inspections. The Corps required monitoring reports for 89 of 

the files that we reviewed, but only 24 percent, or 21 permit files, contained 

evidence that the Corps had actually received the report. Only 15 percent of 

the files contained evidence that the Corps had conducted a compliance 

inspection. Although Corps districts provided somewhat more oversight 

for mitigation conducted by the 85 mitigation banks and 12 in-lieu-fee 

arrangements that we reviewed, even in these cases oversight was still 

limited. For the 60 mitigation banks that were required to submit 

monitoring reports, 70 percent of the files showed that the Corps had 

received at least one monitoring report. The percentage of the mitigation 

bank files with evidence that the Corps conducted an inspection ranged 

from a low of 13 percent to a high of 78 percent in the seven districts. For 

the 6 in-lieu-fee arrangements that were required to submit monitoring 

reports to the Corps, 5 had submitted at least one report. In addition, the 

Corps had conducted a compliance inspection for 5 of the 12 arrangements. 

District officials told us that the Corps’ conflicting guidance, which notes 

that compliance inspections are crucial yet makes them a low priority, as 

well as limited resources contribute to their low level of oversight of 

compensatory mitigation. However, because many projects that we 

reviewed did not receive oversight, the districts cannot definitively assess 

whether compensatory mitigation has been performed on thousands of 

acres. Without this information, it is unclear how the Corps is assessing the 

effectiveness of its mitigation program or assessing whether this program 

is contributing to the national goal of no net loss of wetlands. 

The Corps can take a variety of enforcement actions if required 

compensatory mitigation is not performed. These actions include issuing 

compliance orders, assessing administrative penalties up to $27,500, 

suspending or revoking a permit, implementing the enforcement provisions 

of agreements with third parties, and recommending legal actions.6

According to fiscal year 2003 data provided by the Corps, the seven 

districts did not take any enforcement actions to obtain compliance with 

6

Under Corps’ regulations, the Corps may refer appropriate cases to the local U.S. attorney 

to file a criminal or civil action. Appropriate cases include, but are not limited to, violations 

that are willful, repeated, or of substantial impact. 33 C.F.R § 326.5.
Page 6 GAO-05-898 Wetlands Protection

issued permits. Instead, district officials rely primarily on negotiation with 

permittees and third parties, a first step in the enforcement process, rather 

than enforcement actions to resolve any violations. According to district 

officials, when they find that required compensatory mitigation has not 

been performed, they usually first contact the responsible parties to 

discuss options and time frames for bringing the permittee or third-party 

sponsor into compliance. District officials told us that typically no further 

action is necessary because the desired action is subsequently taken. If 

district officials are not able to resolve the noncompliance through 

negotiation, they told us that they then notify the responsible party in 

writing of the noncompliance and lay out potential enforcement actions 

and time frames. District officials told us that they generally resort to 

enforcement actions only after negotiation fails because taking 

enforcement actions is usually more time-consuming and does not 

necessarily result in the required mitigation being completed. For instance, 

according to Corps district officials, while monetary penalties are an 

effective tool that draws attention to compliance and enforcement, the 

funds collected from assessing these penalties are required by law to go 

into the general fund of the federal Treasury. We found that, sometimes, 

district officials wanting to pursue enforcement actions after detecting 

instances of noncompliance may be unable to do so because they have 

limited their enforcement capabilities by not specifying the requirements 

for compensatory mitigation in permits and by not establishing agreements 

with third parties. For example, the Corps does not always specify what 

mitigation activity should be performed or the time frame for completing 

the mitigation in individual permits. Similarly, some districts have not 

established agreements called for in federal guidance with mitigation bank 

or in-lieu-fee sponsors. Without such agreements, the Corps and the thirdparty sponsors have not formally agreed to the penalties that may be 

imposed and/or corrective actions that may be required if the mitigation 

efforts are not performed. Therefore, the Corps does not have sufficient 

legal recourse if third parties do not perform required compensatory 

mitigation. 

To address the concerns we have identified, we are recommending that the 

Secretary of the Army direct the Corps of Engineers to establish an 

effective oversight approach that will ensure that permittees and third 

parties are performing required compensatory mitigation. In commenting 

on our report, the Department of Defense generally agreed with our 

recommendations.
Page 7 GAO-05-898 Wetlands Protection

Background Wetlands include swamps, marshes, bogs, and similar areas. They are 

characterized by three factors: (1) frequent or prolonged presence of water 

at or near the soil surface, (2) hydric soils that form under flooded or 

saturated conditions, and (3) plants that are adapted to live in these types 

of soils. Wetlands are found throughout the United States. They may differ 

greatly in their physical characteristics; for example, water may not be 

present on the wetland for part of the year or it may be present year-round. 

Figures 1 and 2 show two different types of wetlands—a marsh and a 

bayou. 

Figure 1: Marsh in Michigan

Source: U.S. Fish and Wildlife Service.
Page 8 GAO-05-898 Wetlands Protection

Figure 2: Bayou in Louisiana

Wetlands provide many important functions for the environment and for 

society. For example, wetlands 

• improve water quality by removing excess nutrients from sources such 

as fertilizer applied to agricultural land and municipal sewage and by 

trapping other pollutants in soil particles;

• reduce the harmful effects of weather events by storing flood waters 

and buffering roads and houses from the storm surges caused by 

hurricanes; and

• provide important habitat for plants and wildlife—more than one-third 

of threatened and endangered species, such as the whooping crane and 

Florida panther, live in wetlands. 

Source: U.S. Fish and Wildlife Service.
Page 9 GAO-05-898 Wetlands Protection

Over half of the estimated 220 million acres of wetlands in the contiguous 

United States during colonial times have disappeared, and many of the 

remaining wetlands have been degraded. This loss in wetlands was 

primarily caused by agricultural activities and development; significant 

wetland loss continued through the mid-1970s. While the economic 

pressure to develop wetlands continues today, according to the U.S. Fish 

and Wildlife Service, the rate of wetland loss has decreased significantly 

over the past 30 years.7

The decrease in the rate of wetlands loss stems from executive actions and 

legislation, prompted by an increased recognition of the benefits of 

wetlands. In 1977, the first executive order for the protection of wetlands 

directed federal agencies to take action to minimize the destruction of 

wetlands and to preserve and enhance wetlands’ benefits when carrying 

out responsibilities such as managing federal lands and facilities or 

providing federally financed construction.8

 Subsequently, in 1989, the 

administration set a national goal of no net loss of wetlands to ensure that 

these valuable resources are protected. 

The Clean Water Act provides the primary legislative authority for federal 

efforts to regulate wetlands and other waters of the United States.9

 The 

act’s objective is to restore and maintain the chemical, physical, and 

biological integrity of the nation’s waters. The section 404 program under 

the Clean Water Act is the principal federal program that provides 

regulatory protection for wetlands. Section 404 generally prohibits the 

discharge of dredged or fill material in waters of the United States, which 

7

The Emergency Wetlands Resources Act of 1986, as amended, requires the Fish and Wildlife 

Service to, among other things, assess the status of wetlands in the United States and trends 

in wetland gains or losses and to report the results to Congress each decade. 16 U.S.C. § 

3931.

8

Exec. Order No. 11990 (May 24, 1977).

9

Other federal laws and programs regulating activities in wetlands include the Swampbuster 

Provision of the Food Security Act of 1985, as amended, which denies benefits to farmers 

who drain wetlands on their property; the Wetlands Reserve Program, which offers 

payments to farmers to restore and protect wetlands on their property; and the Coastal 

Wetlands Planning, Protection and Restoration Act, which authorized spending for coastal 

wetlands conservation and restoration projects and created a task force to develop a 

comprehensive approach for protecting and restoring coastal wetlands in Louisiana. 
Page 10 GAO-05-898 Wetlands Protection

include certain wetlands, without a permit from the Corps.10 Responsibility 

for issuing these permits is delegated to 38 Corps district offices. The Corps 

requires the permittee to first avoid discharges of dredged or fill materials 

into wetlands and then to minimize discharges that cannot be avoided. To 

replace lost wetland functions, the Corps can require compensatory 

mitigation as a condition of issuing a permit when damage or degradation 

of wetlands is unavoidable. 

Compensatory mitigation can consist of creating a new wetland, restoring a 

former wetland, enhancing a degraded wetland, or preserving an existing 

wetland. According to Corps guidance, compensatory mitigation should 

generally provide, at a minimum, one-to-one functional replacement for a 

lost wetland.11 When determining the type, size, and nature of 

compensatory mitigation to be performed, district officials may consider 

factors such as the wetland’s location, the rarity of the ecosystem, water 

levels, vegetation, wildlife usage, and the presence of endangered species. 

In some cases, the loss of the functions of a certain wetland area may be 

offset by either a larger or a smaller wetland area. For example, on an 

acreage basis, the ratio should be greater than one-to-one when the lost 

wetland functions are high and the replacement wetlands provide lower 

functions.

In the absence of information about the functions of a certain site, acreage 

may be used instead to determine the amount of compensatory mitigation 

to help achieve the national goal of no net loss. Figure 3 shows land before 

and after a wetland restoration project. 

10These discharges result from activities such as construction or mining and may include 

soil, rock, sand, or other materials. Section 404(g) of the Clean Water Act authorizes EPAapproved states to assume responsibility for issuing section 404 permits in certain waters 

under their jurisdiction (other than waters used to transport interstate or foreign 

commerce); only Michigan and New Jersey have assumed this responsibility.

11Even an acre for acre replacement of lost wetlands may not translate into maintaining 

equal functionality. Questions remain about whether created wetlands function as 

effectively as natural wetlands.
Page 11 GAO-05-898 Wetlands Protection

Figure 3: Wetlands Restoration Project in Washington, D.C. (Before and After)

Compensatory mitigation may be performed by permittees or third parties. 

Third-party mitigation is typically performed by mitigation banks, which 

are generally private for-profit entities that establish wetlands under 

agreements with the Corps, or under in-lieu-fee arrangements, which are 

often sponsored by public or nonprofit entities. Under mitigation banking 

guidance issued in 1995 and in-lieu-fee guidance issued in 2000, mitigation 

bank and in-lieu-fee sponsors should have formal, written agreements with 

the Corps, developed in consultation with EPA and other resource agencies 

such as the U.S. Fish and Wildlife Service, to provide frameworks for how 

the mitigation bank or in-lieu-fee arrangement will operate. According to 

Corps guidance, these written agreements should include information on 

• the mitigation site, including the types of wetlands to be developed, the 

conditions of any existing wetlands, and the geographic area; and 

• site management, such as 

• monitoring plans and reporting protocols on the progress of the 

mitigation, 

• remedial actions and the parties responsible for performing them if 

the mitigation is not successful,

• accounting procedures for tracking payments received from 

permittees,

Source: U.S. Geological Survey. Source: U.S. Geological Survey.

Before After
Page 12 GAO-05-898 Wetlands Protection

• performance standards for determining ecological success of the 

site, and

• provisions for long-term management and maintenance. 

The Corps and EPA, which have joint enforcement authorities for the 

section 404 program, established a memorandum of agreement allocating 

enforcement responsibilities between the two agencies. According to this 

agreement, the Corps is the lead enforcement agency for all violations of 

Corps-issued permits, while EPA is the lead enforcement agency when 

unpermitted activities occur in wetlands.12 Historically, the Corps has not 

emphasized enforcement activities. In 1988, we reported that many Corps 

permits were not monitored for compliance with permit conditions, the 

Corps districts we visited at that time did not place a high priority on 

detecting unauthorized impacts to wetlands, and the frequent lack of 

monitoring could result in the loss of valuable wetland resources. 

Subsequently, in 1993, we reported that the Corps continued to emphasize 

permit processing over compliance and enforcement and that funding and 

staffing shortfalls had inhibited the Corps’ and EPA’s compliance and 

enforcement activities.13 More recently, the National Research Council, 

environmental groups, and others have noted the same lack of emphasis on 

monitoring and enforcement. 

Corps Guidance for 

Oversight of 

Compensatory 

Mitigation Is 

Sometimes Vague or 

Internally Inconsistent

The Corps has developed guidance that establishes two primary activities 

for oversight of compensatory mitigation performed by permittees or third 

parties. The guidance directs Corps districts to require that permittees 

performing compensatory mitigation periodically submit monitoring 

reports that provide information on the status of their mitigation efforts. 

For mitigation banks and in-lieu-fee arrangements, the guidance directs 

Corps districts to require sponsors to submit annual monitoring reports. 

The guidance also suggests that district staff conduct annual on-site 

inspections of mitigation bank activities but does not specify a frequency 

for inspections of mitigation activities performed by permittees and in-lieu12The Corps refers to its actions in response to activities not in compliance with issued 

permits as “compliance actions,” as distinct from EPA’s “enforcement actions” in response 

to unauthorized activities performed without required permits.

13GAO, Wetlands Protection: The Scope of the Section 404 Program Remains Uncertain, 

GAO/RCED-93-26 (Washington, D.C.: Apr. 6, 1993).
Page 13 GAO-05-898 Wetlands Protection

fee sponsors. However, we found that parts of the guidance are vague or 

internally inconsistent, thus limiting their usefulness. 

Corps Guidance Establishes 

Two Primary Oversight 

Activities for Compensatory 

Mitigation

The Corps has three primary guidance documents that establish 

requirements for overseeing compensatory mitigation performed by 

permittees, mitigation banks, or in-lieu-fee arrangements: (1) The 1999 

Army Corps of Engineers Standard Operating Procedures for the 

Regulatory Program; (2) The Federal Guidance for the Establishment, 

Use and Operation of Mitigation Banks; and (3) The Federal Guidance on 

the Use of In-Lieu-Fee Arrangements for Compensatory Mitigation 

Under Section 404 of the Clean Water Act and Section 10 of the Rivers 

and Harbors Act. The two primary oversight activities these guidance 

documents establish are (1) Corps review of monitoring reports submitted 

by permittees or third parties and (2) the conduct of compliance 

inspections (field visits) that provide firsthand knowledge of the status of 

the mitigation.14 The guidance documents lay out the following 

requirements: 

• 1999 Standard Operating Procedures for the Regulatory Program. 

This document, which highlights current Corps policies and procedures 

and provides guidance to the districts for setting priorities for their 

regulatory program activities, calls for Corps districts to require 

permittees to submit periodic monitoring reports and states that the 

districts should review all monitoring reports. It also states that 

compliance inspections are essential to ensure that compensatory 

mitigation is performed and directs Corps districts to inspect a relatively 

high percentage of compensatory mitigation performed by permittees to 

ensure compliance with permit conditions. Districts are to inspect all 

mitigation banks to ensure compliance with the banking agreement.

• Federal Guidance for the Establishment, Use and Operation of 

Mitigation Banks. Developed to provide guidance for establishing, 

using, and operating mitigation banks, this federal guidance directs the 

Corps to require that mitigation bank sponsors submit annual 

monitoring reports to the Corps and other authorizing agencies, which 

can include the EPA and the U.S. Fish and Wildlife Service, among 

others. Typically, mitigation banks are to be monitored for 5 years; 

14See appendix II for a summary of these guidance documents.
Page 14 GAO-05-898 Wetlands Protection

however, according to the guidance, it may be necessary to extend this 

period for mitigation banks that require more time to reach a stable 

condition or that have undertaken remedial activities. In addition, the 

guidance encourages members of the mitigation banking review team, 

which the Corps chairs, to conduct regular (e.g., annual) on-site 

inspections, as appropriate, to monitor bank performance.15

• Federal Guidance on the Use of In-Lieu-Fee Arrangements for 

Compensatory Mitigation Under Section 404 of the Clean Water Act 

and Section 10 of the Rivers and Harbors Act. This federal guidance 

was developed to ensure that in-lieu-fee arrangements can serve as an 

effective and useful mitigation approach. The guidance specifies that 

there should be appropriate schedules established for regular (e.g., 

annual) monitoring reports to document funds received, impacts 

permitted, funds disbursed, types of projects funded, and the success of 

projects conducted. Furthermore, the guidance calls for the Corps in 

conjunction with other federal and state agencies to evaluate these 

reports and conduct regular reviews to ensure that the arrangement is 

operating effectively and is consistent with agency policy and the 

specific agreement.

Corps Guidance Is 

Sometimes Vague or 

Internally Inconsistent 

Although Corps guidance documents establish monitoring reports and 

compliance inspections as the two primary oversight activities for 

compensatory mitigation, these guidance documents are sometimes vague 

or internally inconsistent. Specifically, the guidance is vague on the 

following key points: 

• The circumstances under which monitoring reports should be 

required. Although the Corps’ standard operating procedures call for 

district officials to require and review monitoring reports for mitigation 

banks and “other substantial mitigation,” it does not define substantial 

mitigation. We found that Corps districts differed in how they defined 

“substantial mitigation.” For example, two districts require mitigation 

reports when the mitigation involves restoring, enhancing, or creating a 

wetland but not when the mitigation involves preserving a wetland. 

15A mitigation banking review team is an interagency group of federal, state, tribal, and/or 

local regulatory and resource agency representatives which are signatories to the mitigation 

banking agreement and oversee the establishment, use, and operation of the mitigation 

bank.
Page 15 GAO-05-898 Wetlands Protection

Another district interpreted “substantial” mitigation to include 

mitigation projects that generally involved more than one-half acre. 

• The actions district officials should take if reports are not submitted 

as required. Corps guidance does not address the issue of 

noncompliance if monitoring reports are not submitted for review. For 

the files that we reviewed, we found that monitoring reports were 

provided for 44 percent, or 68 of the 155 cases in which these reports 

were required. District officials told us that, because of budget 

constraints, little time is spent on compliance activities, including 

following up on the submission of monitoring reports. While three 

districts that we visited have established a process for tracking due 

dates for monitoring reports from either permittees or third parties, 

none of the districts had a system for tracking reports from both.16

Without such tracking systems, a district official told us that Corps 

officials may not realize when monitoring reports are due or that the 

reports were not submitted as required.

• The information that should be included in a monitoring report. The 

guidance does not specify what information should be included in 

monitoring reports submitted by permittees and mitigation banks, 

despite the importance of these reports as a primary means of 

overseeing compliance with mitigation requirements. We found that 

some monitoring reports were only a few pages in length and provided 

limited information about the site, while other reports were over 50 

pages in length, were more comprehensive, and included data on the 

water levels at the mitigation site, the plants growing at the site, 

methods for monitoring both the water levels and plant growth, 

documentation of animals present at the site, and photographs of the 

site. The Chief of the Regulatory Branch acknowledged that the 

information submitted in monitoring reports varies significantly and 

may not always provide the details needed to assess the status of the 

compensatory mitigation. 

16The Jacksonville district office has a tracking system for permits and is modifying the 

system to include mitigation banks. The New Orleans district only has a system for tracking 

reports for mitigation banks. The Seattle district has a system for tracking reports from 

permittees, and officials stated that it does not currently need such a system for mitigation 

banks because it has not had a problem with receiving the reports since there are only two 

banks currently approved by the district.
Page 16 GAO-05-898 Wetlands Protection

Furthermore, the guidance is internally inconsistent about the emphasis 

districts should place on compliance inspections. The Corps’ standard 

operating procedures state that compliance inspections are essential, and 

districts should inspect a relatively high percentage of compensatory 

mitigation sites to ensure compliance with permit conditions, although 

they do not define what high means. The mitigation banking guidance 

states that districts should inspect all mitigation performed by banks 

annually to ensure compliance with the banking agreement.17 The in-lieufee guidance does not specify how often compliance inspections should be 

conducted. However, the standard operating procedures also designate all 

compliance inspections as a low-priority activity, to be performed only if 

the goals for other higher-priority work, such as issuing permits, have been 

achieved. Furthermore, the guidance states that the degree to which 

districts perform lower priority work would affect whether districts 

received additional resources. District officials told us that in the past they 

were instructed that if they spent too many resources on low-priority 

activities, their budget would be reduced. Consequently, a number of 

district officials told us that they are unsure of how much time to spend on 

compliance inspections. According to officials in one district we visited, for 

instance, the number of sites they were inspecting was based on a target 

set in the 1991 guidance because the current guidance is not as specific.18

Other districts do not have a specific goal for the number of inspections 

that district officials will conduct for mitigation activities. The Corps is 

revising its standard operating procedures to include specific performance 

goals for compliance inspections. Corps officials told us they expect to 

finalize the revised standard operating procedures by fall of 2005. 

17This agreement is referred to as the mitigation banking instrument in the federal mitigation 

banking guidance.

18In 1991, the Corps’ numerical inspection goal was equivalent to 25 percent of the individual 

permits issued in the prior year. Permits with required mitigation, including general permits 

if applicable, were a high priority to inspect. 
Page 17 GAO-05-898 Wetlands Protection

Corps Districts 

Perform Limited 

Oversight of 

Compensatory 

Mitigation

Overall, the Corps districts we visited have performed only limited 

oversight of compensatory mitigation undertaken by permittees and third 

parties. For the 152 individual permit files that we reviewed, we frequently 

found little evidence that the required monitoring reports were submitted 

or that the Corps conducted compliance inspections. Although Corps 

districts provided somewhat more oversight for mitigation performed by 

the 85 mitigation banks and 12 in-lieu-fee arrangements that we reviewed, 

we found that oversight was still limited even in these cases. Detailed 

results of our file review by district are presented in appendix III. 

Corps Districts Provide 

Little Oversight of 

Mitigation Performed by 

Permittees

According to our review of 152 permit files where the permittee was 

responsible for performing the compensatory mitigation, the Corps 

districts generally provided little oversight either through a monitoring 

report or a compliance inspection.19 The Corps required permittees to 

submit monitoring reports for 89 of the 152 permit files that we reviewed. 

This ranged from a low of zero in Charleston to a high of 100 percent in 

Seattle. However, we found only 21 files contained evidence that the Corps 

actually received these required reports, ranging from a low of zero in two 

districts to a high of 69 percent in Jacksonville.20 Furthermore, only 15 

percent, or 23 of the 152 permit files, showed that the Corps had conducted 

a compliance inspection. The actual proportion of permits receiving 

oversight may be less because several districts could not locate some of the 

permit files that we requested for review. 

The following cases illustrate situations in which the Corps required 

compensatory mitigation as a condition of permit issuance, but the files 

contained no evidence that the Corps had conducted oversight: 

• In November 1999, the Corps issued a permit authorizing a permittee to 

install two boat slips and dredge approximately 5,270 feet of a canal in 

Louisiana, which would affect marsh and other wetland areas. As a 

19The permit files in the Wilmington district contained evidence that district officials had 

more consistently conducted oversight of mitigation performed by permittees. There was 

evidence that district officials had either received a monitoring report or conducted a 

compliance inspection for 14 of 21 permit files, or 67 percent, that we reviewed. See 

appendix III.

20Four permit files contained evidence that the Corps received monitoring reports although 

the Corps did not require submission of these reports.
Page 18 GAO-05-898 Wetlands Protection

condition of issuing this permit, the Corps required the permittee to use 

the dredge material and establish wetland plants to create a 710-acre 

intertidal marsh. The Corps also required the permittee to submit annual 

monitoring reports for 5 years. The file contained no evidence that the 

Corps had received any monitoring reports or conducted compliance 

inspections to determine the status of the required mitigation. 

• In May 2000, the Corps issued a permit authorizing a developer to fill 

over 430 acres of wetlands to build a residential golf community in 

Florida. As a condition of issuing this permit, the Corps required the 

permittee to enhance over 1,000 acres of wetlands and to create 13 acres 

of wetlands. The Corps also required the permittee to submit annual 

monitoring reports for 5 years. The file contained no evidence that the 

Corps had conducted any compliance inspections or received any 

monitoring reports to determine the status of the required mitigation. 

• In May 2000, the Corps issued a permit authorizing a permittee to fill 77 

acres for a landfill in Texas. As a condition of issuing this permit, the 

Corps required the permittee to create 122 acres of prairie wetlands and 

to preserve 58 acres of wetlands on-site. The preservation area also 

included lakes and uplands that were to be managed for wildlife habitat. 

The Corps required the permittee to submit monitoring reports after 6 

months and annually for 5 years. The file contained no evidence that the 

Corps had conducted any compliance inspections or received any 

monitoring reports to determine the status of the required mitigation.

Moreover, even when Corps officials conducted oversight, they did not 

always perform suggested follow-up. For example, in one permit file we 

reviewed, the Corps issued a permit in December 1999 that authorized the 

excavation of an approximately 15-acre sand and gravel mining project in a 

wetland area. The Corps required the permittee to restore the mining area 

to a wetland plant community as the excavation occurred and to submit 

annual monitoring reports on the progress of this restoration effort. The 

permittee submitted one report to the Corps in March 2000, which stated 

that the work authorized by the permit had begun but that compensatory 

mitigation activities could not be completed until excavation was 

completed. No other monitoring reports were in the file, and the file did not 

contain any evidence that Corps officials had followed up to determine if 

the compensatory mitigation was performed. Another file indicated that, in 

December 2000, a Corps official had inspected a project site to assess the 

status of the required compensatory mitigation for a permit issued in 

August 2000. This permit authorized filling about 6 acres of wetlands to 
Page 19 GAO-05-898 Wetlands Protection

build a retail facility. The official’s inspection indicated that construction 

was almost finished, but the mitigation to enhance 4 acres of wetlands was 

still under way. The official recommended that the site be revisited at a 

later date. However, the file contained no evidence that the Corps 

conducted a follow-up compliance inspection or contacted the permittee to 

determine the status of the mitigation. 

Corps Districts Perform 

Somewhat Greater 

Oversight of Mitigation 

Performed by Mitigation 

Banks and In-Lieu-Fee 

Sponsors

Corps districts provided somewhat more oversight for mitigation 

conducted by third parties, although even in these cases oversight was 

limited. Of the 85 mitigation banks that we reviewed, the Corps required 

that 71 percent, or 60 of the 85 mitigation bank sponsors, submit 

monitoring reports and 70 percent, or 42 mitigation bank files, contained 

evidence that at least one monitoring report had been received.21 However, 

only 31 of the 85 mitigation bank files contained evidence that the Corps 

conducted a compliance inspection.22 This ranged from a low of 13 percent 

in the St. Paul district to a high of 78 percent in the Wilmington district. The 

following cases illustrate situations where files contained no evidence that 

the Corps had conducted oversight of the mitigation bank:

• In February 1999, the Corps approved a mitigation bank in Texas that 

preserved and protected about 540 acres of swamp. The agreement 

between the Corps and the mitigation bank sponsor included a 

requirement that the sponsor submit an annual report on the mitigation 

bank’s status of operation and maintenance. The file contained no 

evidence of any monitoring reports submitted by the sponsor or 

compliance inspections conducted by the Corps.

• In August 1999, the Corps approved an approximately 360-acre 

mitigation bank in Louisiana to reestablish a productive, coastal, 

forested wetland ecosystem on previously converted agricultural lands. 

The agreement between the Corps and the mitigation bank sponsor 

included a requirement that the sponsor provide the Corps with annual 

21Only one district did not conduct oversight for a majority of the mitigation banks that we 

reviewed. We reviewed an additional 10 mitigation bank files for banks approved during 

calendar year 2004. We did not include these banks in our overall totals because monitoring 

reports are typically required on a yearly basis and not enough time had elapsed during our 

review to determine if the banks submitted monitoring reports.

22One mitigation bank file contained evidence that the Corps received a monitoring report 

even though the Corps did not require the sponsor to submit monitoring reports.
Page 20 GAO-05-898 Wetlands Protection

monitoring reports for at least 5 years and then reports once every 5 

years. The file contained no evidence of any monitoring reports 

submitted by the sponsor or compliance inspections conducted by the 

Corps.

• In December 2001, the Corps approved a 2,100-acre mitigation bank in 

Florida to restore native tree species and enhance the site’s hydrology. 

The agreement between the Corps and the mitigation bank sponsor 

required the sponsor to submit annual monitoring reports to the Corps 

for 4 years. The file contained no evidence of any monitoring reports 

submitted by the sponsor or compliance inspections conducted by the 

Corps.

For in-lieu-fee arrangements, the Corps required the sponsors of 6 of the 12 

in-lieu-fee arrangements that we reviewed to submit monitoring reports. 

We found that five of the six files contained evidence that the sponsor had 

submitted at least one report. We also found that the Corps had received 

monitoring reports from one in-lieu-fee sponsor who was not required to 

submit a report. In addition, the files contained evidence that the Corps had 

conducted at least one compliance inspection for 5 of the 12 arrangements. 

Conflicting Guidance and 

Limited Resources 

Contribute to the Corps’ 

Low Level of Oversight of 

Compensatory Mitigation

District officials told us that the Corps’ conflicting guidance, which notes 

that compliance inspections are crucial but makes them a low priority, as 

well as limited resources contribute to their low level of oversight of 

compensatory mitigation activities. According to the Chief of the 

Regulatory Branch, historically, districts were to issue permits within 

specified time frames. If those time frames were not met, work in other 

areas, including compliance, was not to be performed. In addition, funds 

were allocated primarily for permit processing, with little remaining for 

other activities. However, Corps headquarters and district officials 

recognize the importance of oversight. They stated that without a 

comprehensive oversight program the Corps cannot ensure that 

compensatory mitigation will occur. In the absence of additional national 

guidance and resources, some of the districts we visited have decided to 

take their own steps to improve oversight. For example, Jacksonville 

district officials increased their compliance inspections of compensatory 

mitigation performed by permittees; the number of inspections more than 

tripled from 2003 to 2004 after several years of decline. In addition, New 

Orleans district officials told us that, in 2003, they began tracking 

monitoring reports and compliance inspections for mitigation banks, more 

aggressively followed up to ensure that the mitigation banks submit 
Page 21 GAO-05-898 Wetlands Protection

required monitoring reports, and increased the number of compliance 

inspections of the mitigation banks.

Corps Districts Can 

Take a Variety of 

Enforcement Actions 

to Resolve Violations 

but Rely Primarily on 

Negotiation

The Corps can take a variety of enforcement actions if required 

compensatory mitigation is not performed.23 Possible enforcement actions 

include issuing compliance orders and assessing administrative penalties, 

requiring the permittee to forfeit a bond, suspending or revoking a permit, 

and implementing the enforcement provisions of agreements with third 

parties to perform mitigation on permittees’ behalf. In addition, the Corps 

may refer a case to the Department of Justice to bring legal action in 

federal district court. However, district officials rarely use these 

enforcement actions, relying primarily on negotiation with permittees or 

third parties as a first step in the enforcement process to resolve any 

noncompliance cases they detect. In some cases, district officials want to 

pursue enforcement actions after detecting instances of noncompliance, 

but they may not be able to do so because they have limited their 

enforcement capabilities by not including specific requirements in the 

permits or third-party agreements. 

A Variety of Enforcement 

Actions Are Available to 

Corps Districts

When the Corps determines that required compensatory mitigation has not 

been performed, the type of enforcement action taken would depend on, 

among other things, whether mitigation is to be carried out by the 

permittee or by a third party. 

In cases where the permittee was to perform the mitigation, the Corps may 

issue a compliance order, assess administrative penalties, require the 

permittee to forfeit a bond, suspend or revoke a permit, and/or refer the 

case to the Department of Justice for legal action. Under section 404 of the 

Clean Water Act and Corps regulations, the Corps may take the following 

actions: 

• Issue compliance orders to permittees who violate any condition of 

their permits. Each order must specify the nature of the violation, 

23The Corps refers to its actions in response to noncompliance as “compliance actions,” as 

distinct from EPA’s “enforcement actions” in response to unauthorized activities performed 

without required permits.
Page 22 GAO-05-898 Wetlands Protection

which could include failure to implement mitigation requirements, and 

specify a time by which the permittee must come into compliance.24

• Assess administrative penalties, in an amount of up to $27,500.25

• Require the permittee to forfeit a bond, if such a bond was a condition 

of the permit. The Corps has the authority to require permittees to post 

a financial bond to assure that they will fulfill all obligations required by 

the permit, which could include compensatory mitigation.26

• Suspend a permit for, among other things, a permittee’s failure to 

comply with the terms and conditions of the permit.27 A suspension 

requires the permittee to stop the activities previously authorized by the 

suspended permit. Following the suspension, the Corps may take action 

to reinstate, modify, or revoke the permit.28

• Refer the case to the Department of Justice to bring an action in 

federal district court seeking an injunction and civil penalties.29

Cases that are appropriate for judicial actions include violations that are 

willful, repeated, flagrant, or of substantial impact.30 Civil penalties may 

be awarded by the court in an amount of up to $25,000 per day for each 

violation.31

2433 U.S.C. § 1344(s); 33 C.F.R. § 326.4(d).

25The Corps has authority to assess Class I administrative penalties in an amount of up to 

$11,000 per violation, not to exceed $27,500. 33 U.S.C. § 1319(g) and 33 C.F.R. § 326.6(a)(1). 

The current penalty amounts were effective July 26, 2004. 69 Fed. Reg. 35518 (June 25, 

2004). However, under the Corps’ policy, once the Corps decides to proceed with an 

administrative penalty, it cannot subsequently refer the case to the Department of Justice 

for legal action. 33 C.F.R. § 326.6(a)(2).

2633 C.F.R. § 325.4(d).

2733 C.F.R. § 325.7(c).

2833 C.F.R. § 325.7(d).

2933 U.S.C. § 1344(s); 33 C.F.R. § 326.5.

3033 C.F.R. § 326.5(a).

3133 U.S.C. § 1344(s)(4).
Page 23 GAO-05-898 Wetlands Protection

The enforcement actions available to the Corps for a mitigation bank or inlieu-fee sponsor's failure to carry out mitigation would depend on the 

provisions that are incorporated into each permit (if applicable) and 

mitigation bank agreement or in-lieu-fee agreement and would be governed 

by the terms of the agreement with the Corps. For example, once the Corps 

has agreed that a permittee’s mitigation requirements will be satisfied by a 

mitigation bank or in-lieu-fee arrangement, the permittee satisfies these 

mitigation requirements by submitting the required payment to the thirdparty sponsor. Federal guidance for mitigation banks states, “it is extremely 

important that an enforceable mechanism be adopted establishing the 

responsibility of the bank sponsor to develop and operate the bank 

properly.”32 The guidance states that the bank sponsor is responsible for 

securing sufficient funds or other financial assurances in the form of, 

among other things, performance bonds, irrevocable trusts, escrow 

accounts, and letters of credit. In addition, “the banking agreement should 

stipulate the general procedures for identifying and implementing remedial 

measures at a bank.” Similarly, federal guidance states that an in-lieu-fee 

agreement should contain, among other things, “financial, technical and 

legal provisions for remedial actions and responsibilities (e.g., contingency 

fund)”; “financial, technical and legal provisions for long-term management 

and maintenance (e.g., trust)”; and a “provision that clearly states that the 

legal responsibility for ensuring mitigation terms are fully satisfied rests 

with the organization accepting the fee.”33

Corps Districts Rely 

Primarily on Negotiation

While the Corps may take a variety of enforcement actions, the seven 

districts did not take any enforcement actions in fiscal year 2003, the latest 

year for which data is available.34 Instead, district officials primarily rely on 

negotiation, a first step in the Corps’ enforcement process, to resolve 

noncompliance issues. In keeping with Corps regulations, district officials 

told us that, when they find that required compensatory mitigation has not 

been performed, they first notify the responsible party and gather relevant 

information to better understand the noncompliance case. They then 

3260 Fed. Reg. 58605 (Nov. 28, 1995). 

3365 Fed. Reg. 66914 (Nov. 7, 2000).

34The fiscal year 2003 data provided by the Corps includes information about litigation and 

penalties but does not provide information on permit suspensions or revocations. According 

to a headquarters senior project manager, the Corps rarely uses these actions to obtain 

compliance. 
Page 24 GAO-05-898 Wetlands Protection

attempt to negotiate by discussing with the permittees or third parties 

available corrective actions and time frames for voluntarily bringing the 

work into compliance. For example, at one district, officials told us that 

corrective actions by responsible parties could include working with an 

environmental organization such as The Nature Conservancy to improve 

wetlands or developing a traveling exhibit for local schools to educate 

children about the value of protecting wetlands. According to Corps 

officials, no additional action is needed generally because responsible 

parties are willing to work with the Corps to get back into compliance. 

If district officials do not succeed in voluntarily bringing the responsible 

party into compliance, they notify the responsible party in writing, laying 

out potential enforcement actions available to the Corps and time frames 

for the party to respond to the letter—the next step toward achieving 

compliance. District officials told us they generally resort to such actions 

to achieve compliance only after negotiation has failed because such 

actions usually take more time to implement. For example, one district 

official estimated that when the Corps refers a noncompliance case to the 

Department of Justice, district officials may be occupied for several 

months. Similarly, according to Corps officials, developers prefer to 

negotiate with the Corps because it is less time-consuming than pursuing 

legal solutions. In addition, use of enforcement actions does not always 

ensure that the required compensatory mitigation will be completed. For 

instance, Corps district officials told us, while monetary penalties are an 

effective tool that draws attention to compliance and enforcement, the 

funds collected from assessing these penalties are required by law to go 

into the general fund of the federal Treasury.35

Corps Sometimes Limits Its 

Own Enforcement Ability

On occasion, district officials wanting to pursue enforcement actions after 

detecting instances of noncompliance may not be able to do so because 

they have limited their enforcement capabilities; that is, they have not 

specified the requirements for compensatory mitigation in permits and 

failed to establish agreements with third parties. In our file review, we 

identified several permits that lacked this crucial information about 

3531 U.S.C. § 3302(b), known as the miscellaneous receipts statute, requires that, unless 

otherwise provided, a government agency must deposit any funds received from sources 

other than appropriations into the general fund of the Treasury.
Page 25 GAO-05-898 Wetlands Protection

required mitigation.36 Both the Chief of the Regulatory Branch and district 

officials stress the importance of including specific mitigation information 

in permits so that the Corps can take actions necessary to ensure required 

compensatory mitigation occurs. However, some of the districts we visited 

acknowledged that the lack of enforceable conditions included within a 

permit has been a problem and they have efforts under way, such as permit 

reviews and standardized permit conditions, to ensure that future permits 

are issued with the conditions needed to ensure enforceability. Although a 

review process for permit conditions may be a good idea, we found that, 

even when a review process was in place in some of the districts we visited, 

they still had issued permits with unenforceable conditions. 

In addition, we found that three districts had not established formal 

agreements with third parties to document the objectives and 

implementation of mitigation banks or in-lieu-fee arrangements, as called 

for in federal guidance. Of the 85 mitigation bank files we reviewed, 21 did 

not have agreements with the Corps. These mitigation banks were all 

located in Minnesota, one of two states with mitigation banks that fall 

under the jurisdiction of the St. Paul District Office. According to district 

officials, Minnesota had developed state mitigation banking guidelines 

before the federal guidelines. Many of the banks in Minnesota were 

approved by the state program and partially developed before requesting 

Corps approval. Corps officials told us they had decided not to take 

additional steps to develop agreements with these mitigation banks. 

Currently, district officials issue a letter approving all or a portion of the 

state bank for use in the Corps compensatory mitigation program but do 

not develop a banking agreement with the bank sponsor. At the time of our 

review, district officials realized that the lack of mitigation banking 

agreements limited their enforcement ability and, therefore, were 

developing banking guidelines to provide more structure for the 

establishment of mitigation banks in Minnesota. However, they had not yet 

begun to consistently develop such agreements.

For the in-lieu-fee arrangements we reviewed, the Galveston and New 

Orleans districts have not established formal agreements with in-lieu-fee 

sponsors. Without such agreements, district officials may not know how 

36A National Research Council report also has noted that it is important for permit 

requirements to contain clear and comprehensive information about compensatory 

mitigation and that without such information Corps officials may not be able to ensure that 

mitigation replaces the functions and values of lost wetlands.
Page 26 GAO-05-898 Wetlands Protection

many permittees are using these arrangements to fulfill their compensatory 

mitigation requirements. For example, for the arrangements that he was 

responsible for monitoring, a Galveston district official could not provide 

us with information about the number of permittees using the arrangement 

to perform compensatory mitigation, the total amount of payments the inlieu-fee sponsor had received, or any oversight activities conducted by the 

Corps to ensure that the sponsor was performing the required 

compensatory mitigation. Before our visit, Galveston district officials were 

unaware that their four in-lieu-fee arrangements were not in compliance 

with federal guidance and are now attempting to restructure these 

arrangements. In addition, a Galveston district official told us the district 

will develop such agreements with the sponsors of future arrangements. 

With regard to the in-lieu-fee arrangement in New Orleans that did not have 

an agreement, officials told us that resource constraints and other 

priorities had prevented them from establishing a formal agreement with 

the in-lieu-fee sponsor. This arrangement has collected approximately $1 

million since its inception in 1994, but district officials could provide no 

other information regarding oversight of the arrangement.37

Until the districts establish formal agreements with third-party sponsors, 

the Corps does not have sufficient legal recourse if third parties do not 

perform required compensatory mitigation because the sponsors have not 

reached agreement with the Corps on what penalties and/or corrective 

actions will be required to address any problems if the mitigation efforts 

are not performed. The Corps’ Chief of the Regulatory Branch noted that he 

would encourage the districts to cease using these in-lieu-fee arrangements 

to provide compensatory mitigation until such agreements are established.

Conclusions The Corps’ section 404 program is crucial to the nation’s efforts to protect 

wetlands and achieve the national goal of no net loss. Although Corps 

officials acknowledge that compensatory mitigation is a key component of 

this program, the Corps has consistently neglected to ensure that the 

mitigation it has required as a condition of obtaining a permit has been 

completed. The Corps’ priority has been and continues to be processing 

permit applications. In 1988 and 1993, we reported that the Corps was 

placing little emphasis on its compliance efforts, including compensatory 

37According to a New Orleans official, although the majority of the total is the result of 

compensatory mitigation requirements, some of the monies were collected as a result of 

penalty assessments from the state’s coastal program.
Page 27 GAO-05-898 Wetlands Protection

mitigation, and little has changed. The Corps continues to provide limited 

oversight of compensatory mitigation, largely relying on the good faith of 

permittees to comply with compensatory mitigation requirements. The 

Corps’ oversight efforts have been further hampered by vague and 

inconsistent guidance that does not (1) define key terms, (2) specify the 

actions Corps staff should take if required monitoring reports are not 

received, or (3) set clear expectations for oversight of compensatory 

mitigation. Furthermore, district officials have failed to establish 

agreements with third-party sponsors that would ensure the agency has 

legal recourse if compensatory mitigation is not performed. Until the Corps 

takes its oversight responsibilities more seriously, it will not know if 

thousands of acres of compensatory mitigation have been performed and 

will be unable to ensure that the section 404 program is contributing to the 

national goal of no net loss of wetlands. 

Recommendations for 

Executive Action

Given the importance of compensatory mitigation to the section 404 

program and its contribution to achieving the national goal of no net loss of 

wetlands, we recommend that the Secretary of the Army direct the Corps 

of Engineers to establish an oversight approach that ensures required 

mitigation is being performed throughout the nation. As part of this 

oversight approach, the Corps should

• develop more specific guidance for overseeing compensatory mitigation 

performed by permittees, mitigation banks, and in-lieu-fee sponsors; in 

particular, the guidance should define key terms such as “substantial 

mitigation” and specify the actions Corps officials should take if 

required monitoring reports are not received;

• clarify expectations for oversight of mitigation, including establishing 

goals for the number of monitoring reports that should be reviewed and 

the number of compliance inspections that should be conducted; and

• review existing mitigation banks and in-lieu-fee arrangements to ensure 

that the sponsor has an approved agreement with the Corps, as called 

for in federal guidance; if such agreements are not in place, they should 

be developed and the Corps should ensure that future mitigation banks 

and in-lieu-fee arrangements have these approved agreements.
Page 28 GAO-05-898 Wetlands Protection

Agency Comments and 

Our Evaluation

We provided a draft of this report to the Secretary of the Department of 

Defense for review and comment. The Department of Defense concurred 

with the report’s findings and recommendations. In its written comments, 

the Department of Defense stated that the Corps is currently revising its 

standard operating procedures. According to the department, the revised 

guidance will provide details on mitigation requirements as well as 

compliance and enforcement procedures. The department also indicated 

that the Corps will issue a Regulatory Guidance Letter that will clarify 

monitoring requirements for compensatory mitigation and include an 

outline for standardized monitoring reports. In addition, the Department of 

Defense provided technical comments and clarifications that we 

incorporated, as appropriate. The Department of Defense’s written 

comments are presented in appendix IV.

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies of this report to interested 

congressional committees and Members of Congress; the Secretary of 

Defense; the Secretary of the U.S. Army; and the Chief of Engineers and 

Commander, U.S. Army Corps of Engineers. We also will make copies 

available to others upon request. In addition, the report will be available at 

no charge on the GAO Web site at http://www.gao.gov. 

If you have any questions about this report, please contact me at (202) 512-

3841 or mittala@gao.gov. Contact points for our Offices of Congressional 

Relations and of Public Affairs may be found on the last page of this report. 

GAO staff who made major contributions to this report are listed in 

appendix V. 

Sincerely yours,

Anu K. Mittal

Director, Natural Resources

and Environment
Page 29 GAO-05-898 Wetlands Protection

Appendix I

Scope and Methodology ApApenednxidexiIs

Our review focused on the compensatory mitigation activities at 7 of the 

U.S. Army Corps of Engineers’ (Corps) 38 districts that implement the 

section 404 program: Charleston, South Carolina; Galveston, Texas; 

Jacksonville, Florida; New Orleans, Louisiana; St. Paul, Minnesota; Seattle, 

Washington; and Wilmington, North Carolina. We selected these districts 

because they represent different geographic areas of the United States, and 

they comprised over two-thirds of the compensatory mitigation required by 

individual permits issued in fiscal year 2003.1

 The Charleston, Galveston, 

Jacksonville, New Orleans, St. Paul, and Wilmington districts were the top 

districts nationwide in terms of mitigation required by individual permits. 

While the Seattle district is not one of the top 7 districts nationwide, it is 

one of the top districts in the western region in terms of required individual 

permit mitigation, and we included it to provide geographic coverage. To 

determine how much compensatory mitigation was required by permits 

issued by each of the 38 districts, we used the Quarterly Permit Data 

System data, which we examined and determined to be suitably reliable for 

selecting the districts to be included in our review.

To identify the guidance the Corps has established for overseeing 

compensatory mitigation, we examined legislation, federal guidance on 

mitigation banks and in-lieu-fee arrangements, Corps regulations, Corps 

guidance, and supplemental guidance developed by the districts. We also 

met with responsible Corps headquarters and district officials to discuss 

the Corps’ guidance on oversight of compensatory mitigation. 

To determine the extent to which the Corps oversees compensatory 

mitigation, we reviewed a total of 249 files. We reviewed 152 permit files 

issued in fiscal year 2000 where the permittee was responsible for the 

mitigation. We selected this time frame because sufficient time would have 

passed for the permittee to begin work on the permitted project, as most of 

the permits we reviewed were valid for 5 years or less, and for the Corps to 

have received a monitoring report or conducted a compliance inspection. 

We also reviewed files for 95 mitigation banks (including 10 mitigation 

banks approved in 2004), and 12 in-lieu-fee arrangements. The mitigation 

banks we reviewed had been approved since the mitigation banking 

guidance was established on November 28, 1995. For in-lieu-fee 

1

Individual permits are typically issued for projects that may have substantial environmental 

impacts. For smaller impacts, Corps officials generally issue either letters of permission, 

which are used when the proposed work is minor and is not expected to receive appreciable 

opposition, or general permits, which cover activities that have been identified as being 

substantially similar in nature, such as stabilizing stream banks.
Appendix I

Scope and Methodology

Page 30 GAO-05-898 Wetlands Protection

arrangements, we reviewed the arrangements currently operating at the 

seven districts at the time of our site visit. These mitigation bank and inlieu-fee arrangement files usually provided data on the mitigation activities 

for multiple permittees, and the mitigation conducted can encompass 

thousands of acres. Owing to the large number of permits and mitigation 

banks at some of the districts, we selected a random sample of permit files 

at Jacksonville and of mitigation banks at the Jacksonville, New Orleans, 

and St. Paul districts. These samples were drawn so that the estimates from 

the samples would have a precision margin of about plus or minus 15 

percentage points at the 95 percent confidence level. However, we decided 

not to project our estimates to the population of permits in the seven 

districts because some districts were unable to find information for our 

sampled units, and another district was unable to provide a list of permits 

within the scope of our sample. Since we had no information on the 

missing permits, we are only presenting estimates for the permits and 

banks that we reviewed.

While our results are not representative of the activities of the 38 district 

offices nationwide, the Corps’ Chief of the Regulatory Branch told us that 

our findings would likely indicate program implementation at the other 

districts not included in the scope of our review. Tables 1 through 3 detail 

the permit files, mitigation banks, and in-lieu-fee arrangements reviewed at 

each of the districts. 

Table 1: Permit Files Reviewed at the Seven Districts, Fiscal Year 2000

Source: GAO analysis of Corps data.

As listed in table 1, we reviewed all permits that met our criteria (individual 

permits where the permittee was responsible for performing mitigation 

issued in fiscal year 2000) with the following exceptions:

District Number of permits reviewed

Charleston 25

Galveston 18

Jacksonville 24

New Orleans 26

St. Paul 31

Seattle 7

Wilmington 21

Total 152
Appendix I

Scope and Methodology

Page 31 GAO-05-898 Wetlands Protection

• Charleston. The district could not locate three permit files.

• Jacksonville. We selected a random sample of 55 the 167 individual 

permits identified by Jacksonville officials. The district could not locate 

complete permit files for 13 of the permits we requested. In addition, 18 

of the permits we requested did not meet our criteria; for example, some 

permits were modified in fiscal year 2000 but were not issued in that 

year. 

• New Orleans. District officials could not identify the permits that met 

our criteria from the district database. Therefore, we asked district 

officials to select the permits issued in fiscal year 2000 where the 

permittee was responsible for performing compensatory mitigation and 

reviewed all of the permits they identified.

• St. Paul. The district could not locate one permit file.

Table 2: Mitigation Banks Reviewed at the Seven Districts, November 28, 1995, 

through December 2004

Source: GAO analysis of Corps data.

a

We randomly selected mitigation bank files for review at this district.

b

New Orleans could not locate files for two of the mitigation banks that we requested for review.

 cThis total includes the 10 mitigation bank agreements that were approved during 2004: Jacksonville - 

4, New Orleans - 1, and St. Paul - 5.

District Number of banks reviewed

Charleston 10

Galveston 4

Jacksonvillea 19

New Orleansa, b 23

St. Paula 28

Seattle 2

Wilmington 9

Total 95c
Appendix I

Scope and Methodology

Page 32 GAO-05-898 Wetlands Protection

Table 3: In-Lieu-Fee Arrangements Reviewed at the Seven Districts

Source: GAO analysis of Corps data.

Note: At the Galveston and New Orleans districts, we asked for documentation of the in-lieu-fee 

arrangements. Because neither of these districts has formal agreements for its arrangements, as 

called for by federal guidance, the districts did not provide any documentation for us to review. 

Therefore, any information about these districts’ in-lieu-fee arrangements was obtained through 

interviews with district officials.

In addition to the file reviews, we spoke with district officials and reviewed 

relevant documentation to gain a better understanding of the districts’ 

oversight programs and to gather any information that may not have been 

available during our file reviews.

To identify the enforcement actions the Corps can take if it determines that 

compensatory mitigation requirements are not being met and the extent to 

which it takes these actions, we analyzed Corps data on how the district 

offices resolved instances of noncompliance during fiscal year 2003. In 

addition, we reviewed relevant regulations and documentation obtained 

either from Corps officials or identified during our file reviews. We also 

discussed with headquarters and district officials the enforcement actions 

available to the Corps and the frequency with which the districts used these 

actions. 

In addition, we met with several sponsors of mitigation banks and in-lieufee arrangements, as well as subject area experts, such as members of the 

National Research Council, to gain their views on the Corps’ mitigation 

program. We conducted our review from June 2004 through September 

2005 in accordance with generally accepted government auditing 

standards.

District Number of arrangements

Charleston 2

Galveston 4

Jacksonville 4

New Orleans 1

St. Paul 0

Seattle 0

Wilmington 1

Total 12
Page 33 GAO-05-898 Wetlands Protection

Appendix II

Corps of Engineers Federal Guidance for 

Oversight of Compensatory Mitigation ApendxiI

As noted earlier, the Corps has three primary guidance documents for 

overseeing compensatory mitigation performed by permittees, mitigation 

banks, and in-lieu-fee arrangements: (1) The 1999 Army Corps of 

Engineers Standard Operating Procedures for the Regulatory Program

(Parts I and II); (2) The Federal Guidance for the Establishment, Use and 

Operation of Mitigation Banks; and (3) The Federal Guidance on the Use 

of In-Lieu-Fee Arrangements for Compensatory Mitigation Under 

Section 404 of the Clean Water Act and Section 10 of the Rivers and 

Harbors Act. These documents provide guidance for overseeing 

compensatory mitigation as described in this appendix.

Standard Operating 

Procedures for the 

Regulatory Program (Parts I 

and II) 

The Corps’ 1999 Standard Operating Procedures for the Regulatory 

Program (Part I) highlights critical policies and procedures that are major 

factors in administering a consistent program nationwide. It specifies the 

following: 

• For all compensatory mitigation,

• Compliance inspections are essential.

• For individual permitees,

• Districts will inspect a relatively high percentage of compensatory 

mitigation to ensure compliance with permit conditions. This is 

important because many of the Corps permit decisions require 

compensatory mitigation to offset project impacts.

• To minimize field visits and the associated expenditures of resources, 

permits with compensatory mitigation requirements should require 

applicants to provide periodic monitoring reports and certify that the 

mitigation is in accordance with permit conditions. Districts should 

review all monitoring reports.

• Districts will require all permittees to submit a self-certification 

statement of compliance. Districts should not be expending funds on 

surveillance as a discrete activity. Surveillance should be performed 

in conjunction with other activities such as permit or enforcement 

actions.

• For mitigation banks,
Appendix II

Corps of Engineers Federal Guidance for 

Oversight of Compensatory Mitigation

Page 34 GAO-05-898 Wetlands Protection

• Districts will inspect all mitigation banks to ensure compliance with 

the banking agreement.

• For in-lieu-fee arrangements,

• These are not mentioned in Part I of the standard operating 

procedures.

The Corps’ Standard Operating Procedures for the Regulatory Program 

(Part II) lists the work that should be prioritized. Part II states that it is not 

intended to dissuade districts from doing lower priority work; however, all 

districts should perform the high priority work before expending resources 

on the lower priority work. Part II specifies the following for mitigation:

• High priority work consists of:

• requiring and reviewing monitoring reports on mitigation banks and 

other substantial mitigation, including in-lieu-fee approaches to 

assure success; and 

• Low priority work consists of:

• compliance inspections for all mitigation and multiple site visits to a 

mitigation site.

Federal Guidance for the 

Establishment, Use and 

Operation of Mitigation 

Banks 

The Federal Guidance for the Establishment, Use and Operation of 

Mitigation Banks, issued in November 1995, provides policy guidance for 

the establishment, use, and operation of mitigation banks for the purpose 

of providing compensatory mitigation. Oversight guidance in this 

document is as follows:

• Members of the mitigation banking review team, which the Corps 

chairs, are encouraged to conduct regular (e.g., annual) on-site 

inspections, as appropriate, to monitor bank performance.

• Annual monitoring reports should be submitted to the authorizing 

agencies, which include the Corps. The period for monitoring will 

typically be 5 years; however, it may be necessary to extend this period 

for projects requiring more time to reach a stable condition or where 

remedial activities were undertaken.
Appendix II

Corps of Engineers Federal Guidance for 

Oversight of Compensatory Mitigation

Page 35 GAO-05-898 Wetlands Protection

Federal Guidance on the 

Use of In-Lieu-Fee 

Arrangements for 

Compensatory Mitigation 

Under Section 404 of the 

Clean Water Act and Section 

10 of the Rivers and Harbors 

Act 

The Federal Guidance on the Use of In-Lieu-Fee Arrangements for 

Compensatory Mitigation Under Section 404 of the Clean Water Act and 

Section 10 of the Rivers and Harbors Act, issued in November 2000, 

clarifies the manner in which in-lieu-fee mitigation may serve as an 

effective and useful approach to satisfy compensatory mitigation 

requirements and meet the administration goal of no net loss of wetlands. 

Related to oversight, it specifies the following: 

• There should be appropriate schedules for regular (e.g., annual) 

monitoring reports to document funds received, impacts permitted, how 

funds were disbursed, types of projects funded, and the success of 

projects conducted, among other aspects of the arrangement.

• The Corps should evaluate the reports and conduct regular reviews to 

ensure that the arrangement is operating effectively and is consistent 

with agency policy and the specific agreement.
Page 36 GAO-05-898 Wetlands Protection

Appendix III

File Review Results by Corps District ApendxiI

This appendix presents the results of our file review at seven Corps 

districts—Charleston, South Carolina; Galveston, Texas; Jacksonville, 

Florida; New Orleans, Louisiana; St. Paul, Minnesota; Seattle, Washington; 

and Wilmington, North Carolina. Results of our review for individual 

permits issued in fiscal year 2000 where permittees were responsible for 

the mitigation are presented in table 4. Results for mitigation banks 

approved between the date of the mitigation bank federal guidance 

(November 28, 1995) and December 31, 2003, are in table 5 and in-lieu-fee 

arrangements currently operating at the districts at the time of our site 

visits are in table 6.

Table 4: Results of Review of Corps Oversight of Individual Permits Issued in Fiscal Year 2000 Where Permittees Are 

Responsible for Compensatory Mitigation

Source: GAO analysis of Corps data.

a

Monitoring report was received, but the Corps did not require the permittee to submit it.

b

Of the eight permit files with evidence of at least one monitoring report in Wilmington, two of the 

permits did not require these reports.

Charleston Galveston Jacksonville New Orleans St. Paul Seattle Wilmington

Number of permit files reviewed 25 18 24 26 31 7 21

Permits requiring monitoring reports 0 11 16 19 19 7 17

Permit files with evidence of at least 

one monitoring report 1a 1a 11 0 2 2 8b

Permit files with evidence of at least 

one compliance inspection 3 3 4 0 1 2 10

Permit files with evidence of either 

monitoring reports or compliance 

inspections 4 3 13 0 3 2 14
Appendix III

File Review Results by Corps District

Page 37 GAO-05-898 Wetlands Protection

Table 5: Results of Review of Corps Oversight of Mitigation Banks Approved from November 1995 through December 2003

Source: GAO analysis of Corps data.

a

GAO reviewed a random sample of mitigation bank files at this district. 

b

Four additional banks were approved in 2004. All of the banking agreements require the sponsor to 

provide monitoring reports to the Corps.

c

One additional bank was approved in 2004. The banking agreement requires the sponsor to provide 

monitoring reports to the Corps.

d

Five additional banks were approved in 2004. Of these, one of the banking agreements required the 

sponsor to provide monitoring reports to the Corps.

e For one bank, a monitoring report was received, but the Corps did not require the bank to submit it.

Table 6: Results of Review of Corps Oversight of In-Lieu-Fee Arrangements Currently in Operation at the Time of Our Site Visit 

Source: GAO analysis of Corps data.

a

The Galveston and New Orleans districts do not have any formal agreements or documentation 

regarding oversight for their in-lieu-fee arrangements. As a result, district officials did not have any 

monitoring requirements or provide files for us to review.

Charleston Galveston Jacksonvillea New Orleansa St. Paula Seattle Wilmington

Number of mitigation bank files 

reviewed 10 4 15b 22c 23d 2 9

Mitigation banking agreements 

requiring monitoring reports 5 4 14 22 4 2 9

Mitigation bank files with evidence of 

at least one monitoring report 4 3 7e 16 2 2 9

Mitigation bank files with evidence of 

at least one compliance inspection 5 1 5 9 3 1 7

Mitigation bank files with evidence of 

either monitoring reports or 

compliance inspections 7 3 8 18 5 2 9

Charleston Galvestona Jacksonville New Orleans a St. Paul Seattle Wilmington

Number of in-lieu-fee arrangements 

reviewed 2 4 4 1 0 0 1

Arrangements with agreements 

requiring monitoring reports 2 0 3 0 N/A N/A 1

Arrangements with evidence of at 

least one monitoring report 1 0 4b 0 N/A N/A 1

Arrangements with evidence of at 

least one compliance inspection 0 0 4 0 N/A N/A 1

Arrangements with evidence of 

either monitoring reports or 

compliance inspections 1 0 4 0 N/A N/A 1
Appendix III

File Review Results by Corps District

Page 38 GAO-05-898 Wetlands Protection

b

For one arrangement, a monitoring report was received, but the Corps did not require the 

arrangement to submit it.
Page 39 GAO-05-898 Wetlands Protection

Appendix IV

Comments from the Department of Defense ApendxiIV
Appendix IV

Comments from the Department of Defense

Page 40 GAO-05-898 Wetlands Protection
Appendix IV

Comments from the Department of Defense

Page 41 GAO-05-898 Wetlands Protection
Page 42 GAO-05-898 Wetlands Protection

Appendix V

GAO Contact and Staff Acknowledgments ApendxiV

GAO Contact Anu K. Mittal (202) 512-3841 (mittala@gao.gov)

Staff 

Acknowledgments

In addition to the individual named above, Sherry McDonald, Assistant 

Director; Diane Caves; Jonathan Dent; Doreen Feldman; Janet Frisch; 

Natalie Herzog; Cynthia Norris; Karen O’Conor; Anne Rhodes-Kline; Jerry 

Sandau; Carol Herrnstadt Shulman; Lisa Vojta; and Daniel Wade Zeno made 

key contributions to this report.

(360490)
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